Fixed-Effects Models and First-Differenced Models

question 18

Multiple Choice

Fixed-effects models and first-differenced models

• A)assume that the time-invariant component of the error term is not correlated with the independent variables.
• B)both add dummy variables to control for individual observations.
• C)provide identical results if there are only two years of data.
• D)do not completely remove the time-invariant component of the error term.

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Definitions:

Normative Base

involves the standard or norm-based criteria or assumptions that underpin a theory, model, or approach.

Uniform Procedures

Standardized methods or processes that are consistently applied in various situations to ensure fairness, efficiency, or quality.

National Character

A set of personality traits and cultural norms thought to be prevalent among citizens of a particular nation.

Five-factor Model

A comprehensive framework for understanding personality, comprised of five broad dimensions: openness, conscientiousness, extraversion, agreeableness, and neuroticism.